Exhibit 99.1

Altair Announces Second Quarter 2018 Financial Results

Second Quarter Software Product Revenue Increased 22% Year-over-Year

TROY, Mich. – August 9, 2018 – Altair (Nasdaq:ALTR) released its financial results for the second quarter ended June 30, 2018.

“Altair’s strong second quarter results exceeded our revenue and profitability expectations and reflect continued business momentum,” said James Scapa, Founder, Chairman and CEO. “Our performance is benefitting from growing market demand for CAE solutions that greatly enhance product design across a growing number of industries.”

Scapa continued, “We are seeing the positive impact our organic and inorganic investments are having across the business. As we move into the second half of 2018 and beyond, we are confident Altair is well positioned to generate a compelling combination of strong revenue growth and expanding profitability.”

Second Quarter 2018 Financial Highlights

 

   

Software product revenue was $72.8 million, an increase of 22% from $59.6 million for the second quarter of 2017.

 

   

Total revenue was $95.6 million, an increase of 17% compared to $81.6 million for the second quarter of 2017.

 

   

GAAP net income was $1.5 million, compared to net loss of $(7.2) million for the second quarter of 2017. Diluted net income per share was $0.02, based on 73.4 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.14) for the second quarter of 2017, based on 50.4 million diluted weighted average common shares outstanding.

 

   

Adjusted EBITDA was $7.3 million, compared to $4.1 million for the second quarter of 2017. Adjusted EBITDA represents net income (loss) adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as determined by management.

 

   

Non-GAAP net income was $3.9 million, compared to $5.1 million for the second quarter of 2017. Non-GAAP net income per share was $0.05, based on 77.0 million non-GAAP diluted common shares outstanding, compared to $0.08 for the second quarter of 2017, based on 62.1 million non-GAAP diluted common shares outstanding. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions and certain tax adjustments.

 

   

Cash flow from operations was $10.6 million, compared to $6.9 million for the second quarter of 2017.


   

Free cash flow, which consists of cash flow from operations less capital expenditures, was $9.2 million compared to $5.5 million for the second quarter of 2017.

Business Outlook

Based on information available as of today, Altair is issuing forward-looking statements on guidance for the third quarter and full year 2018 as indicated below.

 

     Third Quarter 2018      Full Year 2018

Software Product Revenue

   $72.5    to    $73.5      $288.0    to    $290.0

Total Revenue

   $95.0       $96.0      $380.0       $382.0

GAAP Net Income

   $2.0       $2.5      $11.5       $13.0

Adjusted EBITDA

   $8.0       $8.5      $34.0       $35.5

Non-GAAP Net Income

   $4.6       $5.1      $21.2       $22.7

(All figures in millions)

Conference Call Information

 

What:

Altair Second Quarter 2018 Financial Results Conference Call

 

When:

Thursday, August 9, 2018

 

Time:

4:30 p.m. EDT

 

Live Call:

(866) 754-5204, domestic

 

 

(636) 812-6621, international

 

Replay:

(855) 859-2056, passcode 1776298, domestic

 

(404) 537-3406, passcode 1776298, international

 

Webcast:

http://investor.altair.com (live & replay)

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.


Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair

Altair transforms design and decision making by applying simulation, machine learning and optimization throughout product lifecycles. Our broad portfolio of simulation technology and patented units-based software licensing model enable Simulation-Driven Innovation for our customers. With more than 2,000 employees, Altair is headquartered in Troy, Michigan, USA and operates 71 offices throughout 24 countries. Altair serves more than 5,000 customers across broad industry segments. To learn more, please visit www.altair.com.

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business outlook, potential growth, market positioning and future investments, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

Investor Relations

Brian Denyeau

ICR

248-614-2400 ext. 346

ir@altair.com

Media Relations

Dave Simon

Altair

248-614-2400 ext. 332

pr@altair.com


Altair Engineering Inc. and subsidiaries

Consolidated balance sheets

 

     June 30,
2018
    December 31,
2017
 
(In thousands, except per share data)    (Unaudited)        

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 199,230     $ 39,213  

Accounts receivable, net

     73,793       86,635  

Inventory, net

     1,786       1,980  

Income tax receivable

     7,260       6,054  

Prepaid expenses and other current assets

     13,290       10,006  
  

 

 

   

 

 

 

Total current assets

     295,359       143,888  

Property and equipment, net

     30,112       31,446  

Goodwill

     63,263       62,706  

Other intangible assets, net

     24,846       24,461  

Deferred tax assets

     8,113       8,351  

Other long-term assets

     16,077       17,019  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 437,770     $ 287,871  
  

 

 

   

 

 

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

    

Current portion of long-term debt

   $ 390     $ 232  

Accounts payable

     5,957       4,880  

Accrued compensation and benefits

     26,393       26,560  

Obligations for acquisition of businesses

     9,842       13,925  

Other accrued expenses and current liabilities

     20,443       21,744  

Deferred revenue

     147,261       130,122  
  

 

 

   

 

 

 

Total current liabilities

     210,286       197,463  

Long-term debt, net of current portion

     690       178  

Deferred revenue, non-current

     9,256       9,640  

Other long-term liabilities

     13,474       17,647  
  

 

 

   

 

 

 

TOTAL LIABILITIES

     233,706       224,928  
  

 

 

   

 

 

 

Commitments and contingencies

    

MEZZANINE EQUITY

     2,352       2,352  

STOCKHOLDERS’ EQUITY:

    

Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding

     —         —    

Common stock ($0.0001 par value)

    

Class A common stock, authorized 513,797 shares, issued and outstanding
36,518 and 26,725 shares as of June 30, 2018 and December 31, 2017, respectively

     4       2  

Class B common stock, authorized 41,203 shares, issued and outstanding
33,171 and 36,508 shares as of June 30, 2018 and December 31, 2017, respectively

     3       4  

Additional paid-in capital

     369,579       232,156  

Accumulated deficit

     (161,066     (166,499

Accumulated other comprehensive loss

     (6,808     (5,072
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     201,712       60,591  
  

 

 

   

 

 

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

   $ 437,770     $ 287,871  
  

 

 

   

 

 

 


Altair Engineering Inc. and subsidiaries

Consolidated statements of operations

(Unaudited)

 

     Three months ended June 30,     Six months ended June 30,  
(in thousands, except per share data)            2018                     2017                     2018                     2017          

Revenue

        

Software

   $ 72,813     $ 59,600     $ 140,956     $ 113,697  

Software related services

     8,707       8,204       18,180       17,175  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total software

     81,520       67,804       159,136       130,872  

Client engineering services

     12,417       12,365       24,497       24,594  

Other

     1,629       1,477       3,664       3,062  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     95,566       81,646       187,297       158,528  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

        

Software*

     11,983       8,729       22,905       17,633  

Software related services

     6,512       7,114       13,221       13,773  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total software

     18,495       15,843       36,126       31,406  

Client engineering services

     9,960       9,828       20,160       19,969  

Other

     1,001       1,247       2,212       2,297  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     29,456       26,918       58,498       53,672  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     66,110       54,728       128,799       104,856  

Operating expenses:

        

Research and development*

     24,744       22,838       47,447       41,608  

Sales and marketing*

     20,183       19,428       39,160       36,338  

General and administrative*

     17,412       21,201       34,402       37,290  

Amortization of intangible assets

     1,986       1,155       3,926       2,098  

Other operating income

     (392     (2,736     (2,583     (3,330
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     63,933       61,886       122,352       114,004  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2,177       (7,158     6,447       (9,148

Interest expense

     45       548       61       1,159  

Other (income) expense, net

     (176     427       (1,076     786  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     2,308       (8,133     7,462       (11,093

Income tax expense (benefit)

     795       (887     2,029       (1,659
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 1,513     $ (7,246   $ 5,433     $ (9,434
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per share:

        

Net income (loss) per share attributable to common
stockholders, basic

   $ 0.02     $ (0.14   $ 0.08     $ (0.19

Net income (loss) per share attributable to common
stockholders, diluted

   $ 0.02     $ (0.14   $ 0.07     $ (0.19

Weighted average shares outstanding:

        

Weighted average number of shares used in computing
net income (loss) per share, basic

     65,580       50,374       64,614       50,255  

Weighted average number of shares used in computing
net income (loss) per share, diluted

     73,391       50,374       72,881       50,255  


 

*

Amounts include stock-based compensation expense as follows (in thousands):

 

     (Unaudited)  
     Three months ended June 30,      Six months ended June 30,  
             2018                      2017                      2018                      2017          

Cost of revenue – software

   $ 8      $ 11      $ 16      $ 16  

Research and development

     108        3,009        155        3,784  

Sales and marketing

     134        1,684        175        2,115  

General and administrative

     184        6,464        304        8,122  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 434      $ 11,168      $ 650      $ 14,037  
  

 

 

    

 

 

    

 

 

    

 

 

 


Altair Engineering Inc. and subsidiaries

Consolidated statements of cash flows

(Unaudited)

     Six months ended June 30,  
(In thousands)        2018                     2017          

OPERATING ACTIVITIES:

    

Net income (loss)

   $ 5,433     $ (9,434

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     7,525       5,084  

Provision for bad debt

     269       116  

Stock-based compensation expense

     650       14,037  

Deferred income taxes

     (283     (3,679

Other, net

     (154     34  

Changes in assets and liabilities:

    

Accounts receivable

     11,743       11,412  

Prepaid expenses and other current assets

     (2,927     (3,850

Other long-term assets

     (278     (2,567

Accounts payable

     335       955  

Accrued compensation and benefits

     73       (1,531

Other accrued expenses and current liabilities

     (4,496     (2,331

Deferred revenue

     19,423       17,871  
  

 

 

   

 

 

 

Net cash provided by operating activities

     37,313       26,117  
  

 

 

   

 

 

 

INVESTING ACTIVITIES:

    

Payments for acquisition of businesses, net of cash acquired

     (7,028     (6,437

Capital expenditures

     (3,130     (2,335

Payments for acquisition of developed technology

     (2,738     (2,120

Other investing activities, net

     38       (28
  

 

 

   

 

 

 

Net cash used in investing activities

     (12,858     (10,920
  

 

 

   

 

 

 

FINANCING ACTIVITIES:

    

Proceeds from issuance of Class A common stock in follow-on public offering,
net of underwriters’ discounts and commissions

     135,572       —    

Proceeds from the exercise of stock options

     1,668       476  

Payments for follow-on public offering and initial public offering costs

     (468     (869

Payments for redemption of common stock

     (119     (611

Principal payments on long-term debt

     (76     (5,248

Payments on revolving commitment

     —         (53,564

Borrowings under revolving commitment

     —         44,227  

Other financing activities

     (147     (20
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     136,430       (15,609
  

 

 

   

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

     (877     962  
  

 

 

   

 

 

 

Net increase in cash, cash equivalents and restricted cash

     160,008       550  

Cash, cash equivalents and restricted cash at beginning of year

     39,578       17,139  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 199,586     $ 17,689  
  

 

 

   

 

 

 

Supplemental disclosure of cash flow:

    

Interest paid

   $ 41     $ 1,163  

Income taxes paid

   $ 3,660     $ 2,352  

Supplemental disclosure of non-cash investing and financing activities:

    

Capital leases

   $ 1,010     $ —    

Property and equipment in accounts payable and other accrued expenses
and current liabilities

   $ 935     $ 155  

Follow-on public offering costs in accounts payable

   $ 88     $ —    

Promissory notes issued and deferred payment obligations for acquisitions

   $ 278     $ 2,728  

Issuance of common stock with put rights

   $ —       $ 2,345  

Initial public offering costs in other long-term assets

   $ —       $ 1,522  

Issuance of common stock in connection with acquisitions

   $ —       $ 415  


The following table provides a reconciliation of Non-GAAP net income and Non-GAAP diluted earnings per share to net income (loss) and earnings (loss) per share—diluted, the most comparable GAAP financial measures (in thousands):

 

     (Unaudited)  
     Three months ended June 30,     Six months ended June 30,  
             2018                      2017                     2018                      2017          

Net income (loss)

   $ 1,513      $ (7,246   $ 5,433      $ (9,434

Stock-based compensation expense

     434        11,168       650        14,037  

Amortization of intangible assets

     1,986        1,155       3,926        2,098  
  

 

 

    

 

 

   

 

 

    

 

 

 

Non-GAAP net income

   $ 3,933      $ 5,077     $ 10,009      $ 6,701  
  

 

 

    

 

 

   

 

 

    

 

 

 

Earnings (loss) per share — diluted

   $ 0.02      $ (0.14   $ 0.07      $ (0.19

Non-GAAP earnings per share — diluted

   $ 0.05      $ 0.08     $ 0.13      $ 0.11  

GAAP diluted shares outstanding:

          

Weighted average number of shares used in computing net
income (loss) per share, diluted

     73,391        50,374       72,881        50,255  

Non-GAAP diluted shares outstanding:

          

Number of shares used in computing net income per share,
diluted

     77,000        62,100       77,000        62,100  

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ended June 30,     Six months ended June 30,  
             2018                      2017                     2018                     2017          

Net income (loss)

   $ 1,513      $ (7,246   $ 5,433     $ (9,434

Income tax expense (benefit)

     795        (887     2,029       (1,659

Stock-based compensation expense

     434        11,168       650       14,037  

Interest expense

     45        548       61       1,159  

Interest income and other(1)

     536        (2,046     (719     (2,131

Depreciation and amortization

     3,982        2,610       7,525       5,084  
  

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 7,305      $ 4,147     $ 14,979     $ 7,056  
  

 

 

    

 

 

   

 

 

   

 

 

 

 

(1)

Includes an impairment charge for royalty contracts resulting in $0.9 million and $1.8 million of expense for the three and six months ended June 30, 2018, respectively. Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the six months ended June 30, 2018, and three and six months ended June 30, 2017.

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands):

     (Unaudited)  
     Three months ended June 30,     Six months ended June 30,  
             2018                     2017                     2018                     2017          

Net cash provided by operating activities

   $ 10,624     $ 6,915     $ 37,313     $ 26,117  

Capital expenditures

     (1,446     (1,366     (3,130     (2,335
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 9,178     $ 5,549     $ 34,183     $ 23,782  
  

 

 

   

 

 

   

 

 

   

 

 

 


The following table provides a reconciliation of projected net income to projected Non-GAAP net income, the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ending
September 30, 2018
     Year ending
December 31, 2018
 
         low              high              low              high      

Net income

   $ 2,000      $ 2,500      $ 11,500      $ 13,000  

Stock-based compensation expense

     600        600        1,700        1,700  

Amortization of intangible assets

     2,000        2,000        8,000        8,000  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP net income

   $ 4,600      $ 5,100      $ 21,200      $ 22,700  
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure (in thousands):

 

     (Unaudited)  
     Three months ending
September 30, 2018
     Year ending
December 31, 2018
 
         low              high              low              high      

Net income

   $ 2,000      $ 2,500      $ 11,500      $ 13,000  

Income tax expense

     1,200        1,200        6,000        6,000  

Stock-based compensation expense

     600        600        1,700        1,700  

Interest expense

     —          —          —          —    

Interest income and other

     —          —          —          —    

Depreciation and amortization

     4,000        4,000        14,600        14,600  

Other non-recurring charges(1)

     200        200        200        200  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 8,000      $ 8,500      $ 34,000      $ 35,500  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Represents projected non-recurring costs related to impairment charges.

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